IVU exemption period for hurricane prep items going forward despite initial fiscal board opposition
By The Star Staff
Treasury Secretary Francisco Parés Alicea said Thursday that the sales and use tax (IVU by its Spanish acronym) exemption period on items and equipment used to prepare for the annual hurricane season is moving forward despite the opposition of the Financial Oversight and Management Board.
Oversight board legal counsel Jaime El Koury in a recent letter objected to the implementation of the IVU exemption period scheduled for the weekend of June 17.
On May 13, the government submitted to the oversight board a certification and estimate in compliance with the Puerto Rico Oversight, Management and Economic Stability Act, commonly known as PROMESA, that established that the Treasury Department will lose $7 million but that the idea is not inconsistent with the fiscal plan.
El Koury noted that the fiscal plan mandates “any tax reform or tax law initiative that the Government undertakes or pursues during a year within the 2022 Fiscal Plan period must be revenue neutral.”
This means “all tax reductions must be accompanied
by specific, offsetting revenue measures of the same amount that are identified in the enabling legislation,” he wrote.
The federal Title III bankruptcy court has upheld the revenue neutrality mandates in prior fiscal plans.
“We must note the Oversight Board supports the Commonwealth’s efforts to encourage hurricane preparedness and is willing to work with you to create a fiscally compliant tax holiday,” El Koury wrote. “As explained above, the Proposed Determination is inconsistent with the Fiscal Plan and cannot be implemented in its current form.”
Later on Thursday, Gov. Pedro Pierluisi Urrutia said he hopes that the oversight board will accept the IVU exemption, and added that his government will identify funds to tackle the loss for those purposes.
“Steps are being taken before the board to allow this exemption,” the governor said in response to questions from the press. “The period in which we are going to have the exemption had been postponed at the request of the businesses themselves, because, for logistical and technological reasons, they could not apply the exemption with such short notice. So the secretary of the Treasury has already announced the date on which we are going to have the exemption; it is later, and from here to there, we are identifying the form and manner in which we are going to cover the loss of collections in the exemption period, and we hope that the board will give way to it.”